Friday 31 March 2017

Trump’s First Dress Up Friday.

Baltic Dry Index. 1324  -14     Brent Crude 52.62

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

“More than any other time in their history, GB & the EUSSR face a crossroads. One path leads to despair and utter hopelessness. The other, to total extinction. Let us pray they have the wisdom to choose correctly.”

With apologies to Woody Allen

We have reached the end of the month and end of the quarter. We have reached the first “dress up Friday” of the Trump administration, where Wall Street’s Great Vampire Squids get to adjust their portfolios to match what the indexes have done over the quarter. As collateral damage, trying to massage the indexes higher, unintentionally of course.

Is this the end of Trumpmania? It’s still too early to tell, but all week long the Fedsters have been hinting at possibly four rate hikes to come in 2017, rather than their earlier perhaps just two or three. Last week’s Congressional failure to tackle the abolition or reform of “Obamacare” is still weighing on US markets too. Despite all three arms of the US government being under the control of the Republican Party, will this be yet another “do little” hung gridlocked Congress for two years?

We open, however, with big news from South Africa. Is South Africa about to go the way of all Africa, and follow Zimbabwe’s trail of self-imposed destruction and hardship? This morning it looks like it will.

Zuma's Night of Long Knives Risks ANC Split, Credit Rating

by Sam Mkokeli and Michael Cohen
South African President Jacob Zuma fired Finance Minister Pravin Gordhan and eight other cabinet members in a high-stakes power play that may threaten his own presidency and place the nation’s investment grade credit rating at risk.

Gordhan was replaced by Home Affairs Minister Malusi Gigaba, who has no financial or business experience, while lawmaker Sfiso Buthelezi takes over from Mcebisi Jonas as deputy finance minister. The cabinet overhaul came in a late-night move that threatens to split the 105-year-old ruling African National Congress and trigger a revolt against the president. The rand extended losses, heading for its worst week in more than a year.

“Those walking into the Treasury tomorrow will not reassure anyone that the top institution protecting South Africa’s fiscal stability is in safe hands,” said Anne Fruhauf, vice president at New York-based risk adviser Teneo Intelligence. “The move invites a massive backlash from the anti-Zuma faction.”

Zuma’s decision to replace Gordhan, popular with investors because of his efforts to rein in spending, came in the face of opposition from three of the top six members of the ANC and its alliance partner, the South African Communist Party. Some cabinet ministers were said to be ready to turn against the president, who’s survived a series of corruption scandals and presided over the party’s worst-electoral performance since the end of apartheid in 1994 in municipal elections in August.

 “This will exacerbate the existing divisions in the ANC,” Daniel Silke, director of Political Futures Consultancy in Cape Town, said by phone. “We are really in for a roller-coaster ride in terms of ANC cohesion.”

Gordhan’s ouster marked the end of a stormy relationship that began almost as soon as Zuma named him as finance minister in December 2015, four days after the president triggered a sell-off in the rand by replacing the respected Nhlanhla Nene with a little-known lawmaker. He clashed with his boss over the affordability of building nuclear power plants and the management of state-owned companies.

The reshuffle comes in Zuma’s last year as leader of the ruling party and while removing an opponent in a key position may strengthen his grip over the government, a backlash within the party would galvanize his detractors as he seeks to secure his choice as successor in a party election in December.

The rand tumbled, weakening 1.2 percent to 13.4399 per dollar by 2:40 a.m. in Johannesburg on Friday after slumping 1.9 percent the day before. It has plunged 7.5 percent this week, the most of 150 currencies tracked by Bloomberg.

In Brexit news, a little sanity from highly respected US analyst “Mish,” Mike Shedlock and others.  I see little point in trying to negotiate anything, with a committee of 5 preening EU presidents, a rump-EU of 27 bickering veto nations, and a veto held by Belguim’s Walloonatics. Until the French and German elections are out of the way, and new goverments are in place, what is the point?

Bad Brexit Deal Better Than No Deal? Mathematical Idiocy! Odds of No Deal?

Posted by Mish | March 29, 2017 9:54:00
At the top of the list of absurd Brexit advice is the notion that a bad deal is better than no deal.
But that’s what Andrew Duff at the European Policy Center says.

Drop the Clichés
The British side should stop pretending that ‘no deal is better than a bad deal’. It is not. In fact, there’s really
nothing worse than no deal. So it’s not a clever tactic for the UK to start off negotiations by repeating a cliché that at best nobody believes and at worst sounds mildly threatening.

Mathematical Idiocy!
The position of Duff is mathematical idiocy. The EU demands as much as €60 billion in exit fees, adherence to four principles (that the EU itself does not follow), fishing rights, etc. Giving into those demands, or most of them, is like leaving for no reason at all.

Clearly, no deal is better.

Duff is nothing more than a staunch “Remainer” who refuses to accept reality.

€60 Billion in Exit Fees
Eurointelligence takes to task the notion that €60 Billion is remotely close to a starting point for negotiations.
Werner Mussler offers the most detailed account of the financial issues we have seen so far. The €60bn have several components, the largest being a back-of-the-envelope calculation on the EU’s open positions, also known as “reste à liquider“, spending commitments made in the past that have to be paid in the future. They stood at €217bn as of end-2015, and are likely to grow to €240bn by end-2018. Britain’s part would be about €29bn. In reality, that position would be lower since many of these funds are never called.

The second large position regards pension payments to EU employers – not just British – as the EU does not distinguish between UK and other nationals. Locking in a British net contribution for the lifetime of these payments seems ludicrous to us, but it is fair, of course, that the UK pays at least for the pensions of EU employees who are British nationals. If the EU insists on the UK paying for the pension of non-UK nationals post-Brexit, there can be no Brexit agreement. Mussler concludes that the €60bn is a purely political number.

We found ourselves in rare agreement with Holger Stelzner, the FAZ’s conservative economics editor, who asks what kind of community the EU is that wants to penalize a member state for exiting. He also notes that there is no legal basis for the €60bn claim.

Duff would pay the full bill on the absurd grounds that a “bad deal is better than no deal”. The UK may as well hoist the white flag and sue for peace in Duff’s absurd model.

Don't worry about Brexit negotiations, no deal is better than what we have now with the EU 

Edgar Miller29 March 2017 • 10:11am
In response to Theresa May’s view that "no deal is better than a bad deal", Donald Tusk - subsequently joined by Pascal Lamy and Jean-Claude Juncker -  made it clear they believe such a scenario would, in fact, be bad for the UK.

While some of this rhetoric can be seen as the first plays of a negotiating strategy, the answer to this challenge is crucial for the UK Government to understand. The answer, based on our detailed analysis at Economists for Free Trade,  is actually not as complicated as many will have you believe. Our work shows that not only is the WTO option better than a bad deal, it can actually be better than the deal we have at the moment.
First, however, we must deal with the myths surrounding what is misleadingly called the “WTO option”. It’s a misleading term because every option for the UK in its new trading arrangement will be a “WTO option”, given that the UK will take up its full (founding) membership of the WTO and will trade under its rules once we leave the Single Market.
In fact, there is no other way we can leave, regardless of whether we have done a deal with the EU or not. The WTO will be merely the referee in our trading relationships, as it already is with other trading nations of the world such as the US, Japan, India, and so on.
We can reduce tariffs across the board (including to zero) or, for example, reduce tariffs on selected goods that we do not produce in the UK. Most importantly, if we do not reach a free trade agreement with the EU, it will be the choice of the UK to decide what level of tariffs it sets against the EU and – consequently – the rest of the world. It is that one single decision that will decide whether the UK will prosper or not in this new trading environment.
So what happens if we remove tariffs against the EU (and the rest of the world), even if the EU (and the rest of the world) does not reciprocate? In summary, a standard world trade model shows unilaterally removing tariffs creates a long-term GDP gain of 4 per cent, a fall of 8 per cent in consumer prices, and an increase in Treasury revenue of more than 7 percent, compared to the status quo.

In USA news, black just keeps getting blacker. A house divided cannot stand.

Thu Mar 30, 2017 | 8:07pm EDT

Republican disarray deepens as Trump attacks rebel conservatives

U.S. President Donald Trump lashed out on Thursday at Republican conservatives who helped torpedo healthcare legislation he backed, escalating a feud within his party that jeopardizes the new administration's legislative agenda.

Trump threatened to try to defeat members of the Freedom Caucus - a bloc of conservative Republicans in the House of Representatives - in next year's congressional elections if they continued to defy him.

"The Freedom Caucus will hurt the entire Republican agenda if they don't get on the team, & fast. We must fight them, & Dems, in 2018!" Trump wrote on Twitter on Thursday morning.

He later singled out three Freedom Caucus members by name, U.S. Representatives Mark Meadows, Jim Jordan and Raul Labrador.

"If @RepMarkMeadows, @Jim_Jordan and @Raul_Labrador would get on board we would have both great healthcare and massive tax cuts & reform," he said in one tweet.

"Where are @RepMarkMeadows, @Jim_Jordan and @Raul_Labrador?

#RepealANDReplace #Obamacare," he asked in another.

House conservatives fought back.

Labrador, one of the founders of the Freedom Caucus, urged Trump in a tweet to "Remember who your real friends are. We're trying to help you succeed."

"Most people don't take well to being bullied," said Representative Justin Amash, who compared Trump's approach to what a child does when he wants to "get his way."

Trump's deteriorating relationship with Republican House conservatives could make it harder for him to pass his legislative agenda, which includes rewriting the U.S. tax code, revisiting a healthcare overhaul and funding construction of a wall along the U.S.-Mexican border.
Thu Mar 30, 2017 | 9:57pm EDT

Ex-Trump adviser Flynn talking to Congress about testifying in Russia probe: lawyer

Donald Trump's former national security adviser, Michael Flynn, has offered to testify before congressional committees probing potential ties between the Trump campaign and Russia but wants protection against "unfair prosecution," his lawyer said on Thursday.

"General Flynn certainly has a story to tell, and he very much wants to tell it, should the circumstances permit," said a statement from Flynn's lawyer, Robert Kelner.

Testimony from Flynn could help shed light on the conversations he had with Russian Ambassador to the United States Sergei Kisylak last year when he was the national security adviser for Trump's presidential campaign.

Kelner said discussions had taken place about Flynn's availability to testify with officials of the intelligence committees of both the U.S. Senate and the House of Representatives. Both committees are investigating allegations of Russian meddling in the U.S. election campaign last year as well as possible ties between the Trump campaign and Russians.

Flynn was forced to resign as Trump's national security adviser in February for failing to disclose talks with the Russian ambassador before Trump took office about U.S. sanctions on Moscow and misleading Vice President Mike Pence about the conversations.

Questions remain about the scope of the discussions and what other contacts took place between other Trump advisers with the Russians. Earlier this week, the White House disclosed that Trump's son-in-law and White House senior adviser, Jared Kushner, met executives of Russian state development bank Vnesheconombank, or VEB, in December.

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

Ludwig von Mises.

At the Comex silver depositories Thursday final figures were: Registered 34.14 Moz, Eligible 155.84 Moz, Total 189.98 Moz.

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
“The only thing standing between the EUSSR and greatness is the EUSSR.”

With apologies to Woody Allen

Today, who speaks for Europe? A picture of a wealth and jobs destroying economic union, whose time has come and gone under a ton of deceit and lack of reform. It lingers on awaiting death, when the next Lehman hits, and a new global recession puts it out of its misery.

Wed Mar 29, 2017 | 9:22am EDT

EU's Tusk says Brexit will be damage control for both sides

European Council President Donald Tusk told reporters on Wednesday that Britain's formal exit notification made it an unhappy day for London and Brussels and that difficult talks would simply be about limiting damage for both sides.
Tusk, a former Polish prime minister who chairs meetings of EU leaders, waved papers as he began a short statement.
"So here it is. Six pages. The notification from Prime Minister Theresa May triggering Article 50 and formally starting negotiations for the United Kingdom's withdrawal from the European Union," he told reporters less than an hour after receiving the letter from the British ambassador.
"There is no reason to pretend today is a happy day, neither in Brussels nor in London. After all most Europeans, including almost half the British voters, wished that we would stay together not drift apart," he continued.
Tusk, who will share a proposal of the negotiating guidelines with the other 27 member states on Friday, said there was one positive from Brexit - that it had made the remaining EU members more determined and united than before ahead of "difficult negotiations".
Tusk said the EU's goal was to minimise the costs for EU citizens, businesses and member states, whose leaders should adopt the negotiating proposals on April 29.
"There is nothing to win in this process and I'm talking about both sides. In essence this is about damage control," he said.
Concluding his brief remarks to the media in Brussels, Tusk said he had little to add about Britain: "What can I add to this? We already miss you. Thank you and goodbye."

Wed Mar 29, 2017 | 9:14am EDT

Moody's sees UK/EU deal that keeps most of current trade relationship

Moody's credit ratings agency said on Wednesday it expected Britain and the European Union will eventually strike a deal that preserves most - but probably not all - of their current trading relationship after Brexit.
"However, such an agreement would likely take years of negotiation, and there are clear downside risks," Colin Ellis, Moodys chief credit officer for Europe, said in a statement.
"Substantial new tariff or non-tariff barriers, in particular, would have an adverse impact on UK sectors that trade extensively with the EU market."

Thu Mar 30, 2017 | 4:01am EDT

Italy privatization drive peters out as 2018 election moves closer

By Gavin Jones
Italy's commitment to selling off public assets is petering out as politicians look ahead to elections early next year, making it harder to cut the country's huge public debt and leaving it vulnerable to any rise in interest rates.

In late 2015, then-Prime Minister Matteo Renzi said the debt would come down the following year for the first time in eight years, thanks partly to privatizations worth 0.5 percent of gross domestic product.

In the end, the state managed to sell less than a fifth of its targeted amount and the national debt rose to a new high of almost 133 percent of gross domestic product, the highest ratio in the euro zone after Greece.

Renzi confirmed the same privatization target for this year before he resigned in December after Italians rejected his planned constitutional reform in a referendum, but the prospects for selling state assets have continued to dwindle.

With the ruling Democratic Party (PD) embroiled in a bruising leadership battle and elections slated for early 2018, senior PD members including Renzi himself have recently voiced doubts about whether privatizations are a good idea after all.

"As elections come into sight, privatizations don't seem to be the government's focus," said Gianluigi Mandruzzato, head of economic analysis at BSI, part of EFG International (EFGN.S).

The most appetizing items on the government's slate are the state railway company, which is wholly state owned, and the post office, of which 65 percent remains in public hands after a first tranche was sold in 2015. But it failed to follow up with the sale of a planned second tranche of the post office in 2016, citing unfavorable market conditions.

While the market picture has improved, with the Milan bourse up 5.5 percent this year after falling about 10 percent in 2016, the political will seems to have disappeared.

Infrastructure Minister Graziano Delrio recently admitted to "problems" in selling the railways and Antonello Giacomelli, a junior industry minister, warned of the "dangers" of letting the post office fall into the hands of "foreign investment banks" which could close branches and cut staff.

"Politics has taken precedence over economic concerns and there are no privatizations on the horizon now," said Stefano Micossi, an economics professor and director general of Assonime, the association of Italy's listed companies.

"They are unpopular with the unions and politicians who see state companies as a source of jobs and favors to hand out," he added. "There is enormous resistance from the PD and also inside the government."

The Post Office, whose top management was changed by the Treasury this month, declined to comment on whether privatization would go ahead this year.

The state railways is supposed to spin off its high speed and long distance train businesses by July with a view to selling them by the end of the year, but has still not named the advisers for the spin-off.

The company said the privatization required government legislation, which it was discussing with relevant ministers.

Why is it so dangerous? Because no one can foresee what the long-term consequences would be, as a historian I fear that Brexit could be the beginning of the destruction of not only the EU but also of western political civilization in its entirety.

 European Council President Donald Tusk

Donald Tusk confuses John Bull with God.

Technology Update.

With events happening fast in the development of solar power and graphene, I’ve added this section. Updates as they get reported. Is converting sunlight to usable cheap AC or DC energy mankind’s future from the 21st century onwards? DC? A quantum computer next?

Organic-inorganic heterostructures with programmable electronic properties

Date: March 29, 2017

Source: Technische Universität Dresden

Summary: Researchers have devised a novel supramolecular strategy to introduce tunable 1D periodic potentials upon self-assembly of ad hoc organic building blocks on graphene, opening the way to the realization of hybrid organic-inorganic multilayer materials with unique electronic and optical properties.
Vertical stacks of different two-dimensional (2D) crystals, such as graphene, boron nitride, etc., held together by weak van der Waals forces are commonly referred to as "van der Waals heterostructures." Such sophisticated multilayer structures can be used as a versatile platform for the investigation of various phenomena at the nanoscale. In particular, mechanical superimposition of the 2D crystals generates 2D periodic potentials which impart to system unconventional physical and chemical properties.
Here a team of European researchers applied a supramolecular approach to form self-assembled organic molecular lattices with a controlled geometry and atomic precision on top of graphene, inducing 1D periodic potentials in the resulting organic-inorganic hybrid heterostructures. For that purpose, molecular building blocks were carefully designed and synthesized. Those are equipped with (i) a long aliphatic tail, directing the self-assembly and the periodicity of the potential, and (ii) a photoreactive diazirine head group, whose dipole moment modulates the surface potential of the underlying graphene sheet. Upon irradiation with ultraviolet (UV) light before deposition on graphene, the diazirine moiety is cleaved and a reactive carbene species is formed. The latter is prone to react with solvent molecules, leading to a mixture of new compounds bearing different functionalities.
----This bottom-up supramolecular approach can be extended and applied to other inorganic 2D materials such as transition metal dichalcogenides, paving the way to more complex multilayer van der Waals heterostructures. These findings are of great importance for the realization of organic-inorganic hybrid materials with controllable structural and electronic properties featuring unprecedented electrical, magnetic, piezoelectric and optical functionalities.

Another weekend, and talking heads will be busy on both sides of England’s moat, and both sides of the Atlantic too. Strangely, they won’t have very much to say. Below why the EUSSR will never reform, and EC President Tusk forgot the Belgian Walloonatics. Common sense isn’t very common. Have a great weekend everyone. The countryside is now aglow of brilliant white blackthorn blossom.

My intuition is that treaty change is close to mission impossible today because it's not only about rationality, about good argument, we need unanimity between 28 member states, in the European parliament, in 28 national parliaments in the process of ratification. To say that it is a Pandora's Box is too little.

 European Council President Donald Tusk

The monthly Coppock Indicators finished February

DJIA: 20,812  +133 Up. NASDAQ:  5,825 +120 Up. SP500: 2,364 +115 Up.

Thursday 30 March 2017

Brexit Plus 1

Baltic Dry Index. 1338 +05   Brent Crude 52.49

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.


Brexit plus one. Only 729 days left to total freedom in the UK’s Great Escape. Let’s just pray the Deutsche Bank can hold on that long without detonating, that Italy doesn’t implode sooner, or that Three Card Monte di Siena doesn’t need more than one bailout before March 30, 2019. The very dark sky over the rump-EUSSR may yet fall, before John Bull emerges from the end of a needlessly long two year tunnel.

Now we can get rid of that ridiculous blue flag with its circle of faded stars, drop out of the ludicrous Eurovision song contest, drop the unneeded, European directed High Speed 2 railway boondoggle, drop kilometres, meters, centigrade,  for miles, yards, Fahrenheit, etc. Open up airport gates again for British and Commonwealth citizens, start purging all the unnecessary EUSSR red tape. No need to wait for 2 years of haggling with a rump-EU of 5 self-aggrandising  Presidents, 27 squabbling nations, plus the Franco-Belgian Walloonatics. They’ll never agree on anything meaningful.  Just work out the rump-EUs bill and offset it against theirs. On their excess, make them donate it to overseas aid. Take the Christian high ground on their nationals living here and dare them not to follow.  Make Britain great again. GB first but fair.

Below, why this might turn out to be a most auspicious time to be leaving the moribund EUSSR.

Success is the child of audacity

Benjamin Disraeli.

Shipping stocks rocket after analyst calls the bottom

Published: Mar 28, 2017 4:46 p.m. ET

Morgan Stanley says dry bulk market has ‘passed through its cyclical lows’ and is headed toward profitability

Shares of shipping companies soared Tuesday, after Morgan Stanley upgraded several stocks and more than doubled a number of price targets, on the belief that the dry bulk market had bottomed and was on course to start making money.

Analyst Fotis Giannakoulis swung to overweight ratings from underweight on Star Bulk Carriers Corp. SBLK, +15.71%  and on Golden Ocean Group Ltd. GOGL, +9.30% and moved to overweight on Safe Bulkers Inc. SB, +12.17%  from equal weight.

He upgraded Genco Shipping & Trading Ltd. GNK, +9.22%  to equal weight from underweight. He placed an equal weight rating on Scorpio Bulkers Inc. SALT, +2.15% which was previously not rated.

“The dry bulk market has passed through its cyclical lows and is headed toward profitability” for a handful of reasons, Giannakoulis wrote in a note to clients.

--- Giannakoulis cited several reasons for his more bullish outlook on dry bulk shippers:
1) Slowing fleet supply. Giannakoulis said he expects long-term fleet growth of only about 1%, as new ballast-water treatment regulations going into effect in September and the projected implementation of low-sulfur-emission regulations in 2020 keeps the scrapping of old ships at relatively high levels.
2) Strong commodity prices and high steel margins. Since last year, prices for Chinese steel and iron ore have soared 65% from the year before, while freight rates have remained at historic lows, Giannakoulis said. He expects shipping rates and vessel values will continue to move higher for at least another two years.
3) Growing Chinese infrastructure spending. Giannakoulis expects Chinese infrastructure demand, which represents about 25% of that country’s steel demand, to continue to grow as the government returns to traditional fixed-asset investments to stabilize demand. He said the pace of project approvals has been increasing, with infrastructure growth expected to reach 9% in 2017.
4) Increasing dependency of China’s steel industry on imported ore due to falling output and shutdown of induction furnaces that melt scrap. There has been a “very large” increase in iron ore inventories at Chinese ports, as a result of the continued closure of induction furnace capacity, Giannakoulis said. “We believe the closures of these sintering capacity/mines has reduced local miners’ ability to lift production, in turn forcing steel mills to get more iron ore from the seaborne market, driving inventories higher,” he wrote.

Below, anti-Brexit Bloomberg speaks with forked tongue, e.g. “If Britain does leave the EU without a trade deal or a transition to one, its exporters are likely to be exposed to World Trade Organization tariffs after years of duty free trade.”  True insofar as it goes, but it left out that the EU’s exporters to GB would also likely be exposed to “World Trade Organization tariffs after years of duty free trade.”  Since GB runs a massive trade deficit with the EU, those EU tariffs are likely to be more painful to EU exporters and jobs than GB’s, though why either party would want to impose tariffs at all isn’t explained.

 It is much easier to be critical than to be correct.

Benjamin Disraeli.

These Are the Numbers Behind the Thorniest Issues for Brexit Negotiators

By Simon Kennedy March 29, 2017
Tough choices await negotiators in upcoming Brexit talks. How much, if anything, is the U.K. willing to pay to settle its dues? How many immigrants are too many for British voters? How much free-trade can the U.K. still enjoy with the bloc afterward? Will the U.K. economy keep growing? U.K. and EU negotiators will monitor these key indicators over the next two years to help reach a compromise.

These charts illustrate some of the key data the negotiators will have in mind over the next two years.


U.K. Prime Minister Theresa May interpreted last year’s vote for Brexit as a call to clamp down on immigration, which is currently unfettered from the EU. Britain is the second-most-popular destination in the region after Germany, and May is signaling she will impose new curbs.

With 2.2 million Europeans working in the bloc, however, bankers, telecommunications companies and farmers are warning the government not to squeeze too hard on a source of much-needed skills.


In choosing to leave the EU, Britain is jeopardizing access to its largest market, which buys about 45 percent of its exports. The EU knows it has leverage on that front, although cutting off access to the U.K. could end up hurting its own companies, which rely on British consumers to buy their goods.

If Britain does leave the EU without a trade deal or a transition to one, its exporters are likely to be exposed to World Trade Organization tariffs after years of duty free trade.

Supporting the European Union

The departure of the U.K. will leave a hole in the EU budget unless Britain agrees to pay something in return for some benefits. Britain is the bloc’s second-biggest contributor, and the gap it leaves behind will need to be filled by spending cuts or by others chipping in more.

Looking Ahead

An early flashpoint will be whether the U.K. is willing to pay a divorce bill reputed to be around £50 billion. EU officials say the British need to settle their dues before talk can turn to a trade deal, but May’s government questions both the sums floated and their legality.

In other news, is something more than speculation underway in oil? From London I suspect that it is.

Oil prices make steady gains after rallying to a three-week high

Published: Mar 30, 2017 1:12 a.m. ET
Oil prices rose slightly Thursday, with gains tempered by a rising dollar after crude witnessed some of its biggest gains in nearly two months during the U.S. session.

That bounce, which allowed futures to settle at three-week highs on Wednesday, was stoked by data from the U.S. Energy Information Administration showing a larger-than-expected decline in gasoline and distillate supplies as well as refiners processing oil at a higher rate.

“The big falls in gasoline inventories, coming near the end of the refinery-maintenance season, suggest crude-oil inventories are on the cusp of declining,” said ANZ Research. Crude-oil stockpiles rose a less-than-expected 900,000 barrels last week by the government’s count.

Prices were also propelled by declining U.S. oil imports and rising exports. “The trending combination of higher crude runs and lower net crude imports should result in U.S. crude stocks flattening and then starting to decline by the end of April,” said Societe Generale.

Futures initially built on those gains in Asia, but the rise was tempered as the dollar climbed Thursday morning on expectation that U.S. central bank may increase the frequency of interest rate increases this year. A stronger dollar often deters crude buying for traders holding foreign currencies.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in May CLK7, +0.32%   recently traded up 17 cents at $49.69 a barrel in the Globex electronic session. May Brent crude LCOK7, +0.15%  on London’s ICE Futures exchange rose 11 cents to $52.50. The WSJ Dollar Index BUXX, +0.09%  which compares the greenback to 16 currencies was recently up 0.12% to 90.17.

However, the ongoing strong uptrend in U.S. crude production is keeping investors from placing bullish bets. Data showed that despite the recent pullback in prices, domestic output rose for a fifth-straight week.

The secret of success is to be ready when your opportunity comes.

Benjamin Disraeli.

At the Comex silver depositories Wednesday final figures were: Registered 41.28 Moz, Eligible 150.12 Moz, Total 191.40 Moz.

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, trouble in a Chinese dairy makes sour cream in China’s banks. And “the Donald” hasn’t even started his trade war yet.
The gods too are fond of a joke.


Huishan Turmoil Highlights China's $8 Trillion Shadow Loan Risk

Bloomberg News
29 March 2017, 06:48 BST
Turmoil at a small Chinese dairy company is shedding rare light on the final destination for some of the country’s estimated $8 trillion of shadow banking loans.

Jilin Jiutai Rural Commercial Bank Corp., a major creditor to embattled China Huishan Dairy Holdings Co., said late Tuesday it has extended a total of 1.35 billion yuan ($196 million) in credit to the dairy producer, including 750 million yuan through the purchase of investment receivables from a finance lease company.
Investment receivables -- a category that can include using wealth-management products, asset-management plans and trust-beneficiary rights to disguise what are in effect loans -- allow banks to reduce the amount of cash they need to set aside for capital and provisions for loan losses.

The practice of recording loan-type exposures on balance sheets under categories including investment receivables has allowed hundreds of smaller Chinese banks to boost assets and profits. At the same time, it has created opaque risks that could lead to failures, bailouts or liquidity shocks with the potential to jolt national and global markets.

The external public relations agency for Jiutai didn’t immediately reply to an email seeking comment. The bank doesn’t appear to have broken any disclosure rules on its receivables.

China’s shadow banking system could lead to losses of $375 billion, CLSA Ltd. estimated in September. The brokerage said such financing expanded at an annual 30 percent pace from 2011 through 2015 to reach 54 trillion yuan, or 79 percent of the nation’s gross domestic product. But details have rarely surfaced on the specifics of individual shadow banking arrangements.

"Chinese banks are lending more and more money to companies in recent years through investment receivables, partly to circumvent regulatory or internal rules," said Yulia Wan, a Shanghai-based banking analyst at Moody’s Investors Service. Lenders don’t disclose enough information about where the money goes, according to Wan.

In addition, the banks usually don’t provision enough for such exposures, and they fund the transactions through short-term borrowing from other financial institutions, Wan said. "This practice poses risks to both investors and banks themselves."

While China’s shadow-financing system is smaller and less complex than in developed markets, the challenges include poor disclosure, which hampers investors’ assessment of risks. The nation’s financial regulators have taken steps since August to limit exposure at smaller lenders that used short-term interbank borrowings to boost investments in opaque products issued by other financial institutions.

Huishan Dairy called a meeting with eight creditors on Monday asking them not to call in outstanding loans, delay new loans or file lawsuits, according to a message posted Wednesday morning by Hongling Capital Chairman Zhou Shiping in the company’s media WeChat group. The P2P lender has brokered loans to Huishan.

Jiutai said in its statement Tuesday that there have been no defaults on interest due from the 1.35 billion yuan in total credit to Huishan Dairy, which includes 750 million yuan extended on Dec. 1 and 600 million yuan on March 7. The lender also said it will take all necessary measures to ensure the security of the credit.

About two weeks after the first loan, Carson Block, the short seller and founder of Muddy Waters LLC, issued a report on Huishan Dairy alleging the company was worth “close to zero.”

Technology Update.

With events happening fast in the development of solar power and graphene, I’ve added this section. Updates as they get reported. Is converting sunlight to usable cheap AC or DC energy mankind’s future from the 21st century onwards? DC? A quantum computer next?

Planes will be made from wonder material graphene 'in 10 years'

James Quinn28 March 2017 • 12:00pm
Sir Richard Branson has raised the prospect of planes being made entirely from the so-called wonder material graphene within 10 years, as the airline industry battles a 50pc increase in fuel in the last 12 months, sparking a desperate need for ever lighter fleets.
The Virgin Atlantic president, who founded the airline in 1984, described the super-lightweight material as a 'breakthrough technology', which he said could help revolutionise the airline industry and transform its cost base.
Speaking in Seattle, where the British airline has just begun flying on a daily basis for the first time, Sir Richard said: "Graphene is even lighter [than carbon fibre], many times lighter and many times stronger.
"Hopefully graphene can be the planes of the future, if you go 10 years down the line. They would be massively lighter than the current planes, which again would make a difference on fuel burn."
Graphene is a single layer of carbon atoms forming a regular hexagonal pattern, and is extracted from graphite. It has a litany of uses and is said to be as light as a feather yet stronger than steel.
The entrepreneur likened the push for graphene planes to his previous encouragement of Airbus and Boeing to make planes from carbon fibre, a battle he eventually won. Boeing's latest 787 Dreamliner planes, which Virgin is flying on the London Heathrow-Seattle route, are made from 50pc carbon fibre and other composite materials, as opposed to the traditional 100pc aluminium. As a result, they use 30pc less fuel than a standard alternative.
Sir Richard said the airline was still committed to reducing its carbon footprint through using cleaner fuels.
Virgin Atlantic is working with US-based clean fuels specialist Lanzatech on a biological process to convert carbon waste from manufacturing processes into ethanol, which in turn can be converted into jet fuel.
Although the product has yet to be scaled, Virgin bosses are hopeful it could revolutionise the way the fleet consumes fuel.

Well everyone is entitled to their opinion, but “within 10 years” seems too optimistic to me. We’re not yet using graphene in military planes, and my guess is that before commercial planes turn to graphene, the military will have tested and adopted it first.
"If the Europeans truly wish to improve their NATO contribution they can show it simply enough. They can establish professional armed forces, like those of the UK. And they can acquire more advanced technology. Indeed, unless that happens soon the gulf between the European and US capabilities will yawn so wide that it will not be possible to share the same battlefield. Alas, I do not think that sharing battlefields with our American friends - but rather disputing global primacy with them - is what European defence plans are truly about."

 Margaret Thatcher

The monthly Coppock Indicators finished February

DJIA: 20,812  +133 Up. NASDAQ:  5,825 +120 Up. SP500: 2,364 +115 Up.